Tuesday, March 31, 2015

Standing Armies and Liberty

"The army is a broad sword, not a scalpel. Trust me, senator. You do not want the army in an American city."
--Major General William Devereaux (The Siege)

Jacob Hornberger shares some great quotes on the threat to liberty--at home--that standing armies present. Wanted to add them here for future reference.

James Madison: "A standing military force, with an overgrown Executive will not long be safe companions to liberty. The means of defence agst. foreign danger, have been always the instruments of tyranny at home. Among the Romans it was a standing maxim to excite a war, whenever a revolt was apprehended. Throughout all Europe, the armies kept up under the pretext of defending, have enslaved the people."

Patrick Henry: "A standing army we shall have, also, to execute the execrable commands of tyranny; and how are you to punish them? Will you order them to be punished? Who shall obey these orders? Will your mace-bearer be a match for a disciplined regiment?"

Henry St George Tucker in Blackstone's 1768 Commentaries on the Laws of England:  "Wherever standing armies are kept up, and when the right of the people to keep and bear arms is, under any color or pretext whatsoever, prohibited, liberty, if not already annihilated, is on the brink of destruction."

Commonwealth of Virginia in 1788: "...that standing armies in time of peace are dangerous to liberty, and therefore ought to be avoided, as far as the circumstances and protection of the community will admit; and that the military shall be kept under strict subordination to and governed by the civil power."

Pennsylvania Convention:  "...as standing armies in time of peace are dangerous to liberty, they ought not to be kept up; and that the military shall be kept under strict subordination to and be governed by the civil power."

Dwight D Eisenhower: "This conjunction of an immense military establishment and a large arms industry is new in the American experience...Yet we must not fail to grasp its grave implications...In the councils of government, we must guard against the acquisition of unwanted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist. We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted."

Monday, March 30, 2015

Ad Hominem

Doesn't have a point of view
Knows not where he's going to
--The Beatles

In debate or discussion, ad hominem means responding to arguments by attacking the person. Making it personal. Name calling. Bigot, racist, hater, mean-spirited, stupid, insensitive, etc.

When people respond to your arguments in ad hominem fashion, chances are you're making progress toward truth.

When you respond to arguments with ad hominems, you're getting nowhere.

Sunday, March 29, 2015

When The Store Is Closed

Oh, see the fire's sweeping
Our very street today
Burns like a red coal carpet
Mad bull lost its way
--Rolling Stones

Following up on yesterday's post, when cash is no longer a store of value, then by definition risk builds in the financial system. There is no risk-free paper asset. Calling T-bills risk free in this environment is a misnomer. Either there is default risk or inflation risk with all sovereign debt backed by printing presses.

When cash is not a store of value, then paper assets tilt toward excessive risk. There is no pressure relief valve that bleeds off risk and offers sanctuary.

Storing value requires investors to leave the paper financial system. That system collapses in favor of hard assets--gold and other shelters for production.

position in gold

Saturday, March 28, 2015

Store of Value

If I fear I'm losing you
It's just no good
You teasing like you do

Rick Santelli notes a scary quote from Fed head Janet Yellen's recent remarks: "Cash is not a very convenient store of value."

Perhaps so in the eyes of today's central bankers, but not so in terms of healthy financial systems.

Cash (money) is a claim on production. Prior to the advent of money, people traded production directly (barter). Production stored its value completely.

Money was invented to improve the efficiency of trade. The ideal money tracks the value of the goods that it represents on at least a one-to-one basis. As productivity increases, money might even store more value.

Only in a fiat currency world does money lose value.

Quite possibly, the greatest trick central bankers ever pulled was convincing people that money loses value naturally and that falling prices are bad.

Nothing could be further from the truth.

Friday, March 27, 2015

Minimum Wage Joblessness

Standing in line, marking time
Waiting for the welfare dime
'Cause they can't buy a job
--Bruce Hornsby & the Range

The minimum wage thread on these pages is well established. Because they force workers willing to work for less than the legal minimum to the sidelines, minimum wage laws amount to compulsory unemployment.

Although conceptual explanation is straightforward, the question of how much unemployment can be attributed to minimum wage laws in an empirical one. A recent Cato Institute study finds that as minimum wages rose by about 30% during the later part of last decade, these increases reduced the employment-to-population ratio by 0.7 percent. This amount to about 15% of the total decline in employment during the Great Recession period.

That people generally do not grasp the negative relationship between minimum wage laws and jobs demonstrates just how economically illiterate we are.

Thursday, March 26, 2015

Hiding Unemployment

Col Nathan R. Jessup: You want answers?
Lt Daniel Kaffee: I want the truth.
Col Nathan R. Jessup: You can't handle the truth!
--A Few Good Men

Nice picture (source) of relative difference between "headline" U3 unemployment figure and the U6 estimate that includes various categories of unemployed or part time workers.

Basic rule of thumb is U6 = 2*U3.

Of course, it is plausible that even U6 under-reports true unemployment.

That larger issue aside, the present data arrangement, with all of its issues, still bids the straightforward question: Why don't more people question why U3 instead of U6?

Wednesday, March 25, 2015

Robot Socialism

With all the power you're releasing
It isn't safe to walk the city streets alone
Anticipation is running through me
Let's find the keys and turn the engine on
--Eddie Money

Since the Luddites, socialists have been drawn to the robot fallacy like moths to a flame. As demonstrated by Robert Reich here, belief that productivity-improving machines are driving permanent unemployment creates a platform for socialists to lobby for their favorite program: redistribution of wealth.

Among the many questions that Reich does not address is this one: If The Many are all unemployed and therefore incapable of purchasing goods and services from The Few who control the machines, then where is the wealth to be confiscated?

Stated differently, why would entrepreneurs purchase and install machines to produce goods for which there is no market? What investor would provide capital to fund such projects?

Tuesday, March 24, 2015

Liberty vs Democracy

And the men who spurred us on
Sit in judgment of all wrong
They decide
And the shotgun sings the song
--The Who

Consistent with the thread developed on these pages, Prof Williams argues against democracy as an ideal, or even desirable, system for organizing human conduct. The ideal system, as Jefferson observed, is one that upholds man's natural rights to life, liberty, and pursuit of happiness.

Contrary to popular belief, "liberty and democracy are not synonymous and most often are opposites."

Quotes from Madison, Randolph, Adams, and Hamilton clearly demonstrate our founding ancestors' understanding of democracy's threat to freedom. In Federalist #10, for example, Madison observes, "Measures are too often decided, not according to the rules of justice and the rights of the minor party, but by the superior force of an interested and overbearing majority."

The proper role of government is to protect man's inalienable rights from invasion--not to infringe upon them. The founders clearly understood that "because the essence of government is force, and force is evil, government should be as small as possible."

Their resulting framework was not a democracy. The design was a federal republic. In fact, the word "democracy" does not appear in our founding documents. Limited powers were enumerated for central government along with a design to check power among the branches.

Changes to the design were not to be made by majority vote. Instead, supermajorities such as 2/3 congressional approval and 3/4 state ratification to pass constitutional amendments were required.

The intent of these measures was to support rule of law--durable law. Not discretionary rule of democracy that changes with the reigning dominant coalition.

Monday, March 23, 2015

Financial Illiteracy and The State

Somebody once told me
The world is gonna roll me
I ain't the sharpest tool in the shed
She was looking kind of dumb
With her finger and her thumb
In the shape of an "L" on her forehead
--Smash Mouth

Studies continue to indicate low levels of financial literacy among US citizens. People do not understand basic concepts such as saving, debt, time value of money, asset allocation, inflation, etc.

Question: The State benefits from financial illiteracy among the populace. true or false?

Financially dumb people tend not to be free.

Sunday, March 22, 2015

Old Hyde Park

"It's a giant of a human thing."
--Mary Rafferty (The Valley of Decision)

Using this trove of old local maps, the author of this missive discusses the basis for many street names in Hyde Park.

In 1869, what was destined to be Hyde Park was then portions of two townships: Columbia Township to the north and Spencer Township to the south. By stitching together pieces of the two township maps, the author provides an interesting view of land ownership beneath the future Hyde Park.

The dividing line between the Columbia (gray) and Spencer (orange/pink) portions was Observatory Avenue (then called City Road). Several familiar street runs are evident, including Madison, Paxton (north of Observatory only), Edwards, Linwood, and, to my surprise, Grace. Conspicuously absent in 1869: Erie (not built, I believe, until the formal Hyde Park development commenced in the 1890s) and Delta down to Mt Lookout Square.

The author highlights many land parcels with familiar names: Grandin, Stetinius, Edwards, Shaw, Morten, Cryer, Kilgour. Several other names stick out as well: Longworth, Erckenbrecher, Ferris, Nash.

My house sits on land from the Cryer parcel outlined by the yellow box above.

Saturday, March 21, 2015

Wage Decline

So the graduations hang on the wall
But they never really helped us at all
--Billy Joel

Keeping in mind the source (a progressive think tank), this study indicates declining wages across all levels of income. Even college+ educated people are seeing lower wages.

Two likely contributing factors not discussed in the report: a) oversupply of higher ed workers, b) declining productivity as savings/capital dries up.

Friday, March 20, 2015

Debt, Uncertainty, and Adaptation

Do you remember
When you caught your lucky break
You're looking back now
And it seems like a mistake
--John Waite

We have discussed it before. Debt reduces freedom. Borrowing creates the illusion of freedom, as it allows people to consume more in the here and now.

In reality, debt involves a contract where the borrower enters into conditions of voluntary servitude for the lender. Resources borrowed from the lender must be paid back by the debtor's future production.

Borrowers are less free in the future in that they work for others rather than for themselves. They are less capable of pursuing their interests.

Debt is particularly burdensome as environmental uncertainty grows. Uncertainty raises prospects of unforeseen events: illness, layoffs, unforeseen opportunities, breakdowns. Debt reduces capacity for coping with turbulent environments. For coping with change.

Debt creates conditions that impair adaptation.

Thursday, March 19, 2015

Aggressive Hypocrisy

I'm not aware of too many things
I know what I know
If you know what I mean
--Edie Brickell & the New Bohemians

Why can many people see the wrong in government-sponsored violence in other countries but can't see the wrong in government-sponsored violence in their own country? This is clearly a hypocritical stance.

If you don't don't condone state aggression abroad, then why do you condone it at home?

Two possible answers are a) ignorance, b) preference for aggression when it benefits you.

Wednesday, March 18, 2015


"This is a pleasant fiction."
--Lucilla (Gladiator)

Interesting label of "undebtors" for people who have sworn off debt or who are paying off debt as quickly as possible to the end of never borrowing again.

Factors that shape undebtors include a) cultural or familial values that oppose debt, b) being crushed by debt in the past, c) understanding the ROI of paying off debt, d) recognition of debt as institutional instrument of oppression

Not all debt is bad, of course. Entrepreneurs who borrow resources from savers to fund innovative ideas are vital for productivity improvement and prosperity.

The borrowing that we see today, however, is far beyond the entrepreneurial kind.

Imagine a world where all people were undebtors seeking to extinguish and minimize debt. The systematic reduction of aggressive force wielded by the state alone makes this thought a pleasant fiction.

Tuesday, March 17, 2015

Self Sufficiency, Prosperity, and Survival

Inside, outside
Leave me alone
Inside, outside
Nowhere is home
--The Who

In economic context, self sufficiency is satisfying needs via internal production. There is no trade with other producers. By definition, a self-sufficient producer cannot be specialized. Broad range of skills is necessary to produce everything needed.

Without specialization, productivity declines. Efficiencies and learning effects of repetition cannot be realized. Frequent changes between tasks increase switching costs. Less output is created per hour of work.

Self sufficient production strategies are uncommon due to their prosperity-limiting nature.

Free people are likely to favor specialized production strategies. Producers produce a narrow set of outputs. They then trade with specialized producers to acquire economic resources that advance prosperity.

Self-sufficient production strategies become more attractive in markets where trade is restricted. When trade is restricted, the producers must expand their scope of activities in order to satisfy basic needs.

Prosperity is sacrificed in favor of survival.

Monday, March 16, 2015

"But I Paid For It"

All the old paintings on the tomb walls
They do the sand dance don't you know
If they move too quick
They're falling down like a domino

A dilemma facing Tea Party and other small government types concerns entitlement program payouts. Because they have been forced to pay into Social Security, Medicare, during their working lives, many believe it only fair that they should be able to access funds from the system when they retire, reach a certain age, or are in need.

That would be reasonable if a) they had entered into a contract voluntarily, and b) if program administrators had justly managed inflows so that participants could in fact take out what they put in.

Unfortunately, neither is the case. They did not sign a valid contract. Instead, they were shaken down at the point of a gun--forced to surrender production to strong-armed agents. Arguing for an entitlement payout based on past pay-ins is like arguing for a thief to return property stolen in past robberies. The victim may have just claim on those stolen goods but it is not contractual in the classic sense of the word.

Which brings us to the more despicable second point. The thieves who confiscated past entitlement pay-ins have already spent their booty. Entitlement program administrators are running one of the greatest pyramid schemes in history--confiscating resources, consuming them, and then relying on confiscation from future generations to politically satisfy previous victims.

Stated differently, in order for those ripped off in the past to be made whole, then they must be willing to commission the same strong armed agents who stole from them to shake down a new group for some of their production in an ongoing Ponzi of generational theft.

Sunday, March 15, 2015

Student Loan Bailout

"Moral hazard is taking someone else's money and not being responsible for it."
--Gordon Gekko (Wall Street: Money Never Sleeps)

"Moral hazard means once someone bails you out, what's stopping you from taking another shot?"
--Jacob Moore (Wall Street: Money Never Sleeps)

After the Obama administration indicated that it is studying "new bankruptcy options" for student loan borrows, ZeroHedge notes that various progressive groups are jumping on the bandwagon with petitions to cancel all student debt.

These pages have discussed the bubble in higher ed for some time (ex here, here, here).  Student loan debt is now north of $1 trillion and is far higher than credit card debt levels and growth rates. Some forecasts estimate student loan debt greater than $3 trillion a decade from now.

That number seems conservative if loans will be forgiven (debt 'forgiveness' of course is a deceptive term here as cancelling debt means that someone who lent resources will not get them back). How much would YOU borrow for any endeavor knowing that someone will bail you out in the event of problems? If you were an institution, how much would you charge for tuition knowing that buyer behavior is being subsidized?

As ZH observes, we are institutionalizing moral hazard.

Saturday, March 14, 2015

Criticism and Praise

Here comes bad news talking this or that
Well, give me all you got and don't hold back
I should probably warn you that I'll be just fine, yeah
No offense to you, don't waste your time
--Pharrell Williams

Most people tend to dislike criticism more than they like praise. This can be explained in terms of loss aversion, where "losses loom larger than gains."

Criticism and praise can be seen as sources of psychic income. Criticism is a potential source of negative psychic income. It can make us feel angry, sorrowful, betrayed, resentful, etc. When viewed negatively, criticism damages our ego and view of the world.

Praise often forms the basis for positive psychic income. When people compliment us, we feel better about ourselves.

Because we tend to be fast thinkers, we feel threatened by the criticism--even though it can do us absolutely no harm unless we admit it to our thought processes. In classic fight-or-flight response mode, we will react in manners to protect ourselves. Praise, on the other hand, does not threaten us. It demands no self-protective response. As such, we 'value' the negative impacts of criticism higher than the positive impacts of praise.

One way to neutralize the negative effects of criticism is don't take it personally. When we ignore unwanted criticism, then we don't entangle ourselves in the problems of others. We don't waste energy worrying about what others think of us. It has no bearing on what we do.

Obsessing over negatives is reduced, which frees energy to focus on the positive.

Friday, March 13, 2015

Ban Buybacks?

And I'll run in the rain till I'm breathless
When I'm breathless I'll run till I drop
And the thoughts of a fool's scattered careless
I'm just a fool waiting on the wrong block
--Led Zeppelin

Using GM as an example, two Harvard Business Review contributors argue that stock buybacks should be banned. Seven years ago GM was on its deathbed and would have gone out of business had it not been for a government-sponsored bailout and concessions by workers. It is unfair, the authors suggest, that GM is using cash to buy back $5 billion back in stock rather than distributing it to workers or investing in the business.

The solution, they argue is for the president to sign an executive order that bans stock buybacks.

This is statist mentality. Setting aside their demand for executive (fiat) rather than congressional (people) action, the authors fail to consider causes for the huge increase in corporate buybacks. It does not take a genius to recognize that the source of most buyback cash is coming from corporate borrowing. As investors have bid up the prices in search for yield, corporations have been floating debt on the cheap and using the proceeds to buy back their stocks.

The root cause of the buyback bubble is the suppressed interest rate environment fostered by the Federal Reserve. In GM's case, the added kicker is the government-sponsored bailout, which not only has permitted a resource-destroying operation to persist, but also establishes conditions of moral hazard that facilitates continued excessive risk taking.

The HBR contributors offer the classic statist remedy: let's put band-aids on problems created by the state to begin with. Essentially, these remedies constitute games of whack-a-mole as distortions with interventionary policies pop up here and there.

The correct solution is to return interest rates to the market, and to cease bailing out inefficient capital allocators.

Thursday, March 12, 2015

Entitlement, Reparation, and Statism

She's the dollars
She's my protection
Yeah, she's the promise
In the year of election

Entitlement mentality is belief that others owe you. This belief is often rationalized in terms of victimization. Because others have wronged you in the past, they owe you reparation.

Grounds for this thought process are particularly fertile among minority groups. It is easy for minorities to slip into the mindset that majorities have exploited them and therefore should surrender property as compensation.

Entitlement mentality feeds a pathology of resentment that underpins progressive politics and statism.

Wednesday, March 11, 2015

King Dollar

We're talkin' 'bout the dollar bill
Now what are we all to do
--Simply Red

Two months back we noted the strength is the US dollar. Since then, the USD has continued higher. It is almost 25% higher than a year ago and at levels not seen in over 10 years.

This is purely a 'cross rate' phenomenon. In a fiat currency world, there is nothing intrinsically valuable about the USD. It is just a piece of paper, and the Fed has been creating trillion$ of them.

But other central banks are printing too. And in this leveraged world it appears that the USD is perceived as today's 'hot money' relative to other pieces of paper.

As noted previously, it is only a matter of time before US multinationals start complaining about the strong dollars negative effect on exports. They will soon be approaching Washington with hat in hand lobbying for some good old fashioned beggar-thy-neighbor currency weakening.

Tuesday, March 10, 2015

Low Tick

The lights go out and I can't be saved
Tides that I tried to swim against
Have brought me down upon my knees
Oh I beg, I beg and plead

US equity markets close on the low tick, down over 1.5%. Of course, a couple of down days does not a trend change make. Bulls are sure to take a stand.

Bears will be looking for increased selling pressure from bulls who choose to turn tail.

Obvious maginot below is SPX 2000ish. It has served as support multi times over past few months. Also corresponds to 200 day moving avg.

position in SPX

Heavy Open

I see you on the street and you walk on by
You make me wanna hang my head down and cry

This morning's open finds markets down a bone. SPX back down to 50 day moving avg. Will be interested to see whether buy-the-dip once again materializes.

Did add to metals and short positions yesterday.

btw, Yesterday marked the six year anniversary of this bull market. Lows were marked in March, 2009.

position in metals, SPX

Monday, March 9, 2015

Research Funding

From my heart and from my hand
Why don't people understand 
My intentions
--Oingo Bingo

Funding in the form of grants, scholarships, contracts, etc is the lifeblood for many researchers. Resource dependence theory suggests that researchers will be tempted to slant their research if necessary in order to maintain funding flows from external entities.

Research funding might stem from private or public sources. A private research foundation could fund studies as could government agencies.

External entities might fund research for various purposes. They might fund research out of innate curiosity that formal inquiry can satisfy. They might also fund research because they have agendas that could be legitimized by results from formal studies.

When it is agenda driven, research funding becomes just another market for bias. Domains that have become particularly susceptible to agenda-driven studies include healthcare and climate research.

Understanding the "who" and "for what purpose" behind funding sources adds perspective when making sense of research reports.

Sunday, March 8, 2015

Data Point

Just a little pin prick
--Pink Floyd

The endgame in leveraged markets is "risk off." This does not mean rotation out of stocks and into bonds. It means selling of all risk assets. Carry traders closing out projects by selling risk and covering their borrows.

Last Friday was the first day in a while where we had significant moves lower in both stocks and bonds. One tiny data point to be sure, but this is what the beginning of risk off looks like.

Also wanted to note that for the first time in seven years, Fleck has been aggressively short.

position in SPX

Saturday, March 7, 2015

Perfect Storm

Ooh, a storm is threatening
My very life today
If I don't get some shelter
Oh yeah, I'm gonna fade away
--The Rolling Stones

These pages have considered the issues. Economics. Financial system. Monetary policy. Fiscal policy. Geopolitics. All dimensions are redlining.

Yet by and large, people seem unaware or dismissive.

Could be that they are so busy trying to make ends meet that they have no time to think. Could be they don't know what to monitor. Could be that they are married to current policies and can't face being wrong. Could be that they figure someone else has their back in case of a meltdown.

One thing seems certain, historians looking back on this period will ponder how the great majority watched passively as the perfect storm positioned directly over them.

Friday, March 6, 2015

That Ain't Working

I must admit I was a bit in the red
But if you never have the pleasure
Then you could be dead
--Pete Townshend

Despite joyful headlines, positive job reports continue to look less impressive under the hood. Number of people not in the workforce rose to a record 92.9 million. The labor force participation rate fell to 62.8%--matching the lowest print since 1978.

Stocks have initially responded negatively to the headlines. Why? Presumably because robust job reports reduce the Federal Reserve's excuse to keep pedal to the medal w.r.t. loose monetary policy.

position in SPX

Thursday, March 5, 2015

Macro Misses

Close your eyes and I'll kiss you
Tomorrow I'll miss you

ZeroHedge lists the dozens of macroeconomic results that have come in lower than expectations over the past month. The divergence between the SPX and macro indicators is growing into a chasm.

Demonstrates how money printing lulls investors to sleep.

Nightmares await.

position in SPX

Corporate Bond Bubble

I'm not expecting to grow flowers in the desert
But I can live and breathe and
See the sun in winter time
--Big Country

David Stockman laments the corporate bond bubble which in turn has been funding the stock buyback bubble. He reports that corporate bond issuance is tracking at a staggering $1.4 trillion annual rate. Nearly all debt issuance proceeds are being used to buy back stock. In February, buybacks of S & P 500 company shares totaled a record $105 billion.

Meanwhile, real business net investment--what used to be the primary reason for borrowing--has been plunging.

Another massive misallocation of capital engineered by the Fed.

position in SPX

Wednesday, March 4, 2015

Net Standard of Living

Some days won't end ever
Some days pass on by
I'll be working here forever
At least until I die
--Huey Lewis and the News

A family borrows heavily to elevate lifestyle today. Jumbo mortgage. Multiple car loans. Big credit card bills. Student loan debt.

"Look at our standard of living," the family proclaims. Big house. A garage full of cars. Lots of stuff. Vacations. "We are prosperous."

Their prosperity is an illusion, of course. The family's standard of living has not been funded from its own production. Instead, it has been made possible by borrowing resources produced by others. In the future, the family will be working for others rather than for themselves. Unless future productivity is high enough to permit them to maintain their profligate lifestyles while paying off creditors, the family members will have to reduce their future consumption in order to pay their bills.

To correctly assess degree of present prosperity, the extent to which today's consumption comes from borrowed production must be taken into account. If this is done, then many would be surprised to learn how low their net standard of living is.

The family of the United States would be particularly surprised.

Tuesday, March 3, 2015

Asset Inflation Policy

She packed my bags last night, pre-flight
Zero hour, nine am
And I'm gonna be high
As a kite by then
--Elton John

Suppose that you wanted to juice stock, bond, and other financial asset prices as high as possible. Suppose that the tools at your disposal included power to dictate short term rates, the ability to print money out of thin air, securities regulation, a syndicate of banks reporting to you, and power to issue and purchase debt instruments.

How would your policy choices look anything different than they actually are right now?

Monday, March 2, 2015

Jobless Recovery

I walk along the city streets
You used to walk along with me
And every step I take reminds me 
Of just how we used to be
--Naked Eyes

Prof John Taylor updates his economic recovery metrics that we first reviewed nearly a year and a half ago. His data suggest little real improvement since then.

Perhaps the most striking stat is the trend in the percentage of the US population currently working. Here we more than six years since the official end of the recession and we have about the same fraction of US citizens working now as were working at the end of the Great Recession.

As a frame of reference, Taylor provides fraction working following the '82 recession. As I happened to enter the full time work force in June, 1983, I was part of that particular uptrend.

Factors different this time around include less savings available to apply toward capital investment, previous malinvestment resulting in useless capacity, and, of course, the transfer payment bonanza which keeps many people on the dole.

Sunday, March 1, 2015

Socialism, Slavery, and Sin

"There will be a day when you will wish that you had done a little evil to do a greater good."
--Sybilla (Kingdom of Heaven)

Socialism is an economic system that prohibits private ownership of property. Property is said to be 'socialized,' meaning that whatever is produced is expropriated from the producers and pooled together in the public domain and then redistributed by a group of central planners.

The economic problems posed by socialism are well known with Mises (1951) delivering perhaps the most decisive critique.

Here, Prof Williams considers the moral argument against socialism. On the most basic of levels, socialism is theft. Property of one person is confiscated for the benefit of another.

Because property is confiscated on an ongoing basis, then socialism can be seen as a form of slavery. Slavery is "the forceful use of one person to serve the purposes of another."

As Prof Williams observes, various euphemisms are employed to cloak the evil. Social Security, Medicare, transfer payments, contributing, fairness, social contract, common good, democracy, et al.

Many people see socialism as a good thing because it can have good ends (helping people). Of course, good ends do not justify evil means. As WEW observes: "Reaching into one's own pocket to assist his fellow man is noble and worthy of praise. Reaching into another's pocket to assist one's fellow man is despicable and worthy of condemnation."

With the commandment "Thou shalt not steal" as a backdrop, Christians on the road to truth must conclude that socialism is sinful.